Greek Debt Buyers Include Third Point, Greylock, Appaloosa: WSJ

By Brendan Conway

The lull in investor fright over Greece has led to a boomerang in the country’s battered financial assets. More than a few hedge funds were ready to profit.

The Wall Street Journal’s Charles Forelle, Matina Stevis and Matt Wirzsurvey the phenomenon in this morning’s paper. The beneficiaries have included Daniel Loeb’s Third Point Capital, Greylock Capital Management, Fir Tree Partners, and Appaloosa Management LP’s David Tepper, they report.

Monday, the Greek government bond that matures in 2023 yielded 16.53%, according to Tradeweb. It was slightly weaker on the day, but the yield is three percentage points below where it was at the beginning of the month. Falling yields mean rising prices.

Funds that bought over the summer have done well.

Their performance doesn’t mean much for Greece itself. Some Greek funds and banks have notched gains, but the government is years away from being able to issue new bonds.

Indeed, even through the rosiest of rose-colored glasses, Greece looks troubled. Almost no one thinks it will emerge from its deep slump any time soon, or even that it will pay back all it owes. The bonds are risky and the market small. Just 20% of Greece’s €300 billion in debt is in private hands; the rest is held by the European Central Bank, the International Monetary Fund and the euro-zone governments that have bailed Greece out.

But, the bulls argue, Greek bonds have been so cheap it hardly matters. They represent a rare chance to own debt of a European nation for a pittance. “You don’t get a lot of opportunities like these,” says Greylock’s Hans Humes, noting his portfolio is about 20% Greek debt.

It’s worth noting that Joe Investor could have hitched a ride, too, provided that he is a risk taker. The Global X FTSE Greece 20 ETF (GREK) has more than doubled off the early June 52-week low of $8.78. Despite Greece’s woes, the fund is up more than 30% year to date, according to FactSet Research Systems.

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Chris Dieterich has covered the U.S. stock market for The Wall Street Journal and Dow Jones Newswires. He is a graduate of Regis University and the Missouri School of Journalism.